Table of Contents 004 （I）Important Notes 005 （II）Company Profile 007 （III）Financial and Operating Highlights 010 （IV）Changes in Equity and Shareholders 017 （V）Directors, Supervisors and Senior Management 026 （VI）Corporate Governance 034 （VII）Shareholders’Meeting 035 （VIII）Reports of the Board of Directors 061 （IX）Reports of the Board of Supervisors 063 （X）Important issues 075 （XI）Financial Report 203 （XII）Documents Available For Inspection Neusoft Corporation Annual Report 2011 The year 2011 saw the 20th anniversary of Neusoft, a milestone year for us. Focusing on business model innovation, global strategy and operational excellence, we have mapped out future development strategies to build up necessary power and capacities for a sustainable growth. In the aspect of business model innovation, we have been devoted to building a company driven by innovation and service through leveraging our competitiveness and com- petence. In the aspect of global strategy, we have combined all business lines in and outside China, making all products and services available in both local and international markets. In the aspect of operational excellence, we have made some reforms covering organization, technology, culture, leadership and human resources to ensure that Neusoft operates at in- creasingly high efficiency levels. However, the past years were merely a start for our future adventure at Neusoft. We need more entrepreneurial employees to stand out and continue our growth with passion and wisdom. In the coming years, Neusoft will strive to maintain a fast sustainable growth through business innovations to build up an emerging multinational company. Dr. Liu Jiren Chairman As the economy was in a complicated ever-changing state in 2011, we have made con- tinuous efforts in extending our global presence, building the marketing system focusing on key accounts, optimizing the distributed delivery model, implementing effective market com- petition strategies, expanding core business offerings to high-profile customers, and accelerat- ing mergers and acquisitions across industries. On another dimension, we launched an opera- tional excellent plan, which, through constantly optimizing resource allocation and improving organizational capabilities, has helped ensure a sustainable growth for all of our businesses. In 2012, we will implement an innovation-based strategy aiming for global expansion. More input will be made in designing and developing new businesses to facilitate business re- structuring towards an innovation/service-driven growth. In the meantime, with continued building of a highly efficient global service support system across the company, we need to further optimize and implement our operational excellence plan for improved management and operational efficiency. Specifically, for China’s market, we will aggressively extend our of- ferings for high-profile customers for fast business growth, mostly by reinforcing our leading competitiveness in those industries and markets where we play. Globally, we will further in- crease input in international market development. Therefore, we need to improve our engi- neering service capabilities, such as planning, consulting, system design, etc., and build up our knowledge assets. Overall, we will further accelerate business integration and inter-pro- motion in both Chinese and international markets, thereby realizing a blistering growth. Wang Yongfeng President Neusoft Corporation Annual Report 2011 （I）Important Notes 1）The Board of Directors, Board of Supervisors, directors, and supervisors as well as the senior management of the Company here- by represent and warrant that this Report contains no false representations, misleading statements or material omissions, and shall be indi- vidually and jointly reliable for the authenticity, accuracy and integrity of the contents. 2）BDO CHINA SHU LUN PAN Certified Public Accountants LLP has issued a standard and unqualified auditor’s report. 3）Liu Jiren, Chairman & CEO, Wang Li, Senior Vice President & CFO, and Chen Lei, Head of Finance Operation Division hereby con- firm the authenticity and integrity of financial reports in the Annual Report. 4） This Report is primarily about Neusoft Corporation （“Neusoft” or the “Company”）, including any and/or all branches and subsidiaries of the Company. 004 （II）Company Profile 2.1 Overview Registered Company Name in Chinese “东软集团股份有限公司” Abbreviation of Registered Company Name in Chinese “东软集团” Registered Company Name in English Neusoft Corporation Abbreviation of Registered Company Name in English Neusoft Legal Representative Liu Jiren 2.2 Contact Secretary of the Board of Directors Representative for Securities Affairs Name Wang Nan Zhang Long Neusoft Park, No.2 Xinxiu Street, Hunnan New District, Neusoft Park, No.2 Xinxiu Street, Hunnan New District, Address Shenyang 110179, PR China Shenyang 110179, PR China Tel: 8624-83662115 8624-83662115 Fax: 8624-23783375 8624-23783375 Email: [email protected] [email protected] 005 2.3 Basic information Registered office No.2 Xinxiu Street, Hunnan New District, Shenyang 110179, PR China Address of office Neusoft Park, No.2 Xinxiu Street, Hunnan New District, Shenyang 110179, PR China Official website http://www.neusoft.com Email: [email protected] 2.4 Information disclosure and venue of report preparation Newspaper designated by the Company for information disclosure China Securities Journal, Shanghai Securities News Website designated by China Securities Regulatory Commission for http://www.sse.com.cn publication of annual report Venue of preparation of annual report Office of the Board of Directors 2.5 Company stock Company Stock Class of stock Stock exchange Stock name Stock code Name of stock before alteration A Shanghai Stock Exchange Neusoft Corporation 600718 Neusoft Stock/ Neu-Alpine Neusoft Corporation Annual Report 2011 2.6 Others Date of initial registration June 17th, 1991 Place of initial registration No. 11, Lane 3, Wenhua Road, Heping District, Shenyang 110819, PR China Date of registration alternation October 28th, 2010 Place of registration alternation No. 2, Xinxiu Street, Hunnan New District, Shenyang 110179, PR China Registered No. of Corporate Business License 210100402001491 Tax Registration No. 210132604608172 Organization code 60460817-2 BDO CHINA SHU LUN PAN Certified Public Accountants LLP Name of the appointed CPA firm (Formally known as BDO CHINA SHU LUN PAN Certified Public Accountants Co., Ltd.) F4, New Huangpu Financial Plaza, No. 61, East Nanjing Road, Shanghai 201804, Office address of the CPA firm PR China 006 （III）Financial and Operating Highlights 3.1 Key accounting data Unit: RMB Yuan Item Amount Operating income 310,300,179 Total profit 492,886,660 Net profit attributable to shareholders of listed company 417,068,980 Net profit attributable to shareholders of listed company after deducting non-recurring profits and losses 286,807,569 Net cash flow from operating activities 300,196,604 3.2 Non-recurring profits/losses Unit: RMB Yuan Non-recurring profits/losses 2011 Remarks 2010 2009 Profits and losses arising from disposal of fixed assets, intan- Profit/loss on disposal of non-current assets 18,180,599 43,302,916 -7,903,766 gible asset and long-term equi- ty investment 007 Government grants recorded in current profit Government grants for re- and loss, with exception of those closely rela- search projects and various ted to the normal operations of the Company 105,173,354 government funds and subsi- 109,335,552 38,968,688 and continuously received at certain quotation diaries recorded in the current or quantity according to the policies and regu- profit and loss lations of China Surcharges received from Nan- hai Neusoft Institute of Infor- Payment from non-financial businesses for use mation Technology and Cheng- 9,946,738 9,897,547 7,730,763 of funds recorded in current profit and loss du Neusoft Institute of Infor- mation Technology on delayed payment for assets transfer Profits from fair value of the investee’s net identifiable assets attributable to the Company when the investment cost acquired from the 26,753 subsidiary, associated or joint-venture is lower — — — than the investment Profits and losses from invest- Gains/losses from exchange of non-monetary ment into Appconomy, Inc. 24,934,400 assets with the right to use technical — — intangible asset Neusoft Corporation Annual Report 2011 Continued table Non-recurring profits/losses 2011 Remarks 2010 2009 Profits/losses on changes in fair value from held-for-trading financial assets/liabilities, invest- Profits on changes in fair value ment income from disposal of held-for-trading of held-for-trading financial as- 950,557 -694,314 83,998,795 financial assets/liabilities and available-for-sale sets （Foreign exchange for- financial assets, except for hedging business re- ward contract） lated to normal operation of the Company Reversal of provision for depreciation of recei- 6,600,000 13,400,000 vables measured separately — — Other non-operating income/expenses 1,313,927 — -1,945,474 2,295,537 Investment income from acqui- sition of Beijing LBS Social In- Other non-recurring gains/losses 1,221,899 surance Information Technolo- — — gy Co., Ltd. Minority shareholders’interests -11,201,619 — -21,764,898 -10,030,006 008 Income tax consequences -20,258,444 — -17,278,655 -9,690,610 Total 130,261,411 — 127,479,427 118,769,401 3.3 Three-year key accounting data and financial indicators before the end of reporting period Unit: RMB Yuan Year-on-year 2009 Key accounting data